Loss of Ventura has implications on Royals payroll

The death of Yordano Ventura has left family, friends, and fans grieving. Eventually, however, thoughts will return to baseball and the tragedy has left questions about the financial obligations owed by the Royals and owed to Ventura’s estate.

Yordano Ventura signed a five-year, $23 million deal with the Royals just before the 2015 season. Under that deal, he is still owed just under $20 million through the year 2019 plus a $1 million buyout. Typically under contract law, a death would void a service contract. However Major League Baseball contracts are guaranteed, according to reporter Ken Rosenthal, despite the death of the player. The money owed to Ventura will likely continue to go to his estate, which presumably includes his wife, Mari Pili Sangiovanni, and his three children, as well as possibly his mother, Marisol.

As part of the Collective Bargaining Agreement, it is standard for every team to take out a life insurance policy on a player with the club as the sole beneficiary. The purpose of the policy is to offset amounts that the club may pay under the contract in the event of the player’s death. The policy pays 100% of the first $1 million of the salary obligations, and 75% of the remainder, up to $30 million. So the Royals would only be obligated to pay just over $4 million of Ventura’s contract out of their own pocket.

However guaranteed contracts can become non-guaranteed contracts through player conduct. Yahoo! Sports reporter Jeff Passan wrote about how teams have become more aggressive in recent years in inserting clauses that cause certain behavior to render a contract as non-guaranteed. According to an example contract provided from the Chicago Cubs, the following could render a contract non-guaranteed.

"(A)uto racing, motorcycling, piloting, co-piloting, learning to operate, or serving as a crew member of, an aircraft, being a passenger in a single engine airplane or private plane, hot air ballooning, parachuting, skydiving, hang gliding, bungee jumping, horseback riding, horse racing, harness racing, fencing, boxing, wrestling, karate, judo, jujitsu, any other form of martial arts activity, use of an All Terrain Vehicle (‘ATV'), skiing (water or snow), snowmobiling, bobsledding, luging, ice hockey, ice boating, field hockey, squash, spelunking, basketball, football, softball, white water canoeing or rafting, kayaking, jai-alai, lacrosse, soccer, tennis, rodeo, bicycle racing, motor boat racing, polo, rugby, rodeo, handball, volleyball, in-line or other roller skating, surfing, hunting, paddleball, racquetball, archery, wood chopping, mountain climbing, boating, any weightlifting not prescribed by or approved in advance by Club (said approval not to be unreasonably withheld), participation in the ‘Superteams' or ‘Superstars' activities (or any like activity) or other made-for-television or made-for-motion picture athletic competitions, or any other sport, activity, or negligent act involving a reasonably foreseeable substantial risk of personal injury or death."

According to Rosenthal, the clause in Ventura’s contract can render the contract as non-guaranteed if he operated a motor vehicle while intoxicated. While we do not know the specifics of the life insurance policy for the club, it is very possible that may be void as well if it turns out Ventura was driving while drunk. The initial reports from Dominican officials were that no signs of alcohol were present at the crash, although it will take three weeks for toxicology reports to confirm those findings.

As Rosenthal points out, the Royals could still decide to make a financial payout to Ventura’s estate if the contract is rendered non-guaranteed. The St. Louis Cardinals paid out the $8 million owed pitcher Darryl Kile in 2002 after he was found dead in his hotel room from a heart condition, even though toxicology reports found evidence of marijuana. Teams have tried to convert guaranteed contracts to non-guaranteed contracts a few times in the past, according to Passan, but ended up settling.

San Diego tried unsuccessfully to void LaMarr Hoyt's deal when he got caught smuggling Valium across the Mexican border. Only three other conversion cases are known: the Rockies with Denny Neagle after he allegedly solicited a prostitute, the Orioles with Sidney Ponson following a second DUI, and the Mets with Francisco Rodriguez when he tore a ligament trying to punch his girlfriend's father. All three were settled for close to 90 cents on the dollar owed, sources said, before an arbitrator could rule on any grievance.

Ventura’s estate would also receive a $450,000 life insurance payout from his policy through the MLBPA. Baseball only requires 43 days of service time to vest in their pension plan, so Ventura’s estate could receive pension payments as well.

Ventura was set to earn $3.45 million for the 2017 season. With the backloaded contract extension of Danny Duffy, recent trades this off-season, and the loss of Ventura, the Royals projected payroll is around $135 million. Rosenthal writes that the Royals previously had about $2.5 million left to spend this offseason and were looking for a reliever. With the loss of Ventura, they may need to turn their attention to a starting pitcher.